Want to Jump-Start the Economy? Bring Back Labor Unions

In its annual poll, national pulse-taker Gallup reported that a little over half of Americans -- 54% -- approved of labor unions, while 39% disapprove. The approval rate is higher than the 48% recorded in 2009, but the percentage of respondents who disapprove is the highest since Gallup started its survey, way back in 1936.

It's interesting that the subject of unions can still evoke strong emotion, particularly since the U.S. union membership rate has fallen to a paltry 11.3% since the 20.1% reported in 1983. Recently, however, unions have become a hot-button topic of discussion. Low-wage workers in the fast-food and retail industries have been making headlines, forming picket lines, and walking off the job as they demand higher wages and the right to form unions.

Politicians, too, are beginning to add their voices in support. U.S. Senator Elizabeth Warren, D-Massachusetts, recently addressed the annual AFL-CIO convention in California, allying herself with union principles. Meanwhile, New York City Mayoral candidate Bill de Blasio has publicly stated his desire to help "strengthen the labor movement" if he attains the mayor's office.

Income inequality has exploded since the financial crisisA study by Emmanuel Saez, UC Berkeley, paints a stark picture of income inequality since the end of the Great Recession. Everyone suffered income losses during the 2007 to 2009 downturn, with the richest 1% losing 36.3% of income growth, and everyone else saw their income dip by 11.6%.

Between 2009 and 2012, however, the top 1% has seen its income grow by 31.4%, compared to the 99%, who have attained a measly 0.4% income gain during the same time period. That means that a whopping 95% of the total 6% income growth experienced by all Americans during the economic recovery was nabbed by the highest 1% of wage earners. Saez notes that wage inequality has been rising over the past 30 years, possibly accelerated by the demise of factors such as progressive tax policies -- and labor unions.

High rates of unionization doesn't mean slow growthInterestingly, the highest approval rating for labor unions registered by Gallup was during the 1950s, when it reached 75%. The percentage of workers who were unionized was also highest during that decade, when over a third claimed union membership.

This state of affairs did not hobble economic growth, however: The economy grew more than 3% per year during that decade, according to Robert Reich, Secretary of Labor during the Clinton years. Incidentally, the corporate tax rate was somewhere between 50% and 60% during the 1950s, as well -- compared to approximately 30% today.

Unions put more spending money in workers' pocketsOne of the biggest benefits of union membership is that union members make higher wages than non-union workers for comparable work. More money earned means more cash to spend -- a real advantage in an economy that is 70% consumer-driven.

The difference in pay is sizable. Data from the Bureau of Labor Statistics show that the median weekly wages of full-time workers who are members of unions are $200 higher than their non-union counterparts.

The difference is most profound in the lower-paid occupations, where the pay of service-sector union members is $300 more per week than that of non-union employees. For professional occupations, the difference in pay is negligible -- for architects and engineers, for example, union workers make about $30 more each week than those that are non-unionized. Those workers, however, make a median income of over $1,300 per week, while unionization for a service worker can mean the difference between a weekly paycheck of $458 or $754.

It's time to spread the wealth aroundThe inability of workers to stimulate the economy through spending affects corporate growth, too. If you're wondering whether companies can afford to pay higher wages with the economy still in the doghouse, consider that U.S. corporations are currently hoarding $1.79 trillion in cash, according to a recent study by Stanford University. Many of these entities are publicly held, and stockholders have been becoming more vocal about the fact that these firms should be sharing the wealth with their investors in the form of dividends.

Similarly, some of the kitty could be shared with employees, too -- in the form of higher wages. After all, stimulating the economy will help boost corporate profits, which will, in turn, create more wealth for stockholders.

Of course, not all companies have a gigantic stash of money, just as not all workers would join unions, even if they had the opportunity to do so. Encouraging unionization may not bring back the high union membership rates of the 1950s, or that decade's wildly expansive economic growth -- but, it's a good place to start.

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Yeah, the unions have done wonders for the rust belt states like Michigan. Is it any wonder that when Wisconsin public sector workers were given the chance to ditch the unions by Scott Walker's Act 10 union membership decreased by 64.5%? What a freegan eediot!

Here is the deal no one threatened anyone with layoffs in the public sector..first of all its against federal law and second of all it would be all across the news and the court cases would be publicized. So real nice try on that one. Unions are dead.

You folks that make up crap like that are exposed as the motley fool you are..WAKE up its a world economy..Unions have insured factories have moved overseas because of lower labor costs. The Idea that allowing Unions to grow here and the idea that because of that jobs would be plentiful is about the stupidest argument that has ever been made. The reality is what is fact and reality is the Global economy..The next time you Rail on Walmart for selling stuff made overseas think about what you are saying..those jobs killed by factory deaths are being transferred to the import export realm..dock workers truck drivers goods handlers and so on..its just that the jobs have left the cities effected. Unions should have thought about that when they drove GM and Chrysler out of Business along with the Garment industry and Durable Goods folks and Allowed the Japaneses to take the market In all of those areas..now its India and Pakistan with Clothes and call centers.The Philippines With Call centers China,Taiwan.and Japan along with Mexico for Appliances and Electronics. Everyone building cars here and Mexico..Harley Davidson has a Huge plant In India Yea you bet Unions..They were greedy little pigs Who could not See what was happening and still can't.

There is nothing good about Unions, starting with having t pay for work. And that money they rape you of goes to progressive liberal democrat causes.

Then we get into work ethic, union laborers are just that laborers. They know little to nothing after 25 years of service. Know how I know? I worker right along side them as non union is Manhattan. They are useless, over paid and to use the right word here.....stupid.

Love it how a lot of people post on here hating unions.....maybe the corporate's made their companies collapse? They agreed to the union demands so it is also their fault is they did not do that.....funny, public workers can't be unionized....right...just because FDR said that does not make it law moron ceasefire....sounds like you are jealous battery....if there that useless, they would have been gotten rid of...don't say they have universal protection, they do not....moron

Unions have nearly destroyed entire industries in this country. And they have leveled companies (remember the Hostess debacle?). To think that a fast food employee, a job for teenagers and unskilled labor, should command $15/hour is absurd.

Unions are not the answer. Employee centric companies such as Costco are.

Unions priced low skilled workers out of the market. How much is someone whose skill set is limited to repetitive, simple tasks believe he or she can earn before an employer must look to labor saving devices or outsourcing?

We are having an insourcing boom in this country again but in the case a recent return of a textile mill in North Carolina the new story is told. The factory previously employed over 200 workers. Modern technology in textile production requires the same output with 14 workers.

This isn't about corporate, union, or worker greed. This is about economic realities. Displaced workers and more importantly workers that can be displaced MUST begin to recognize they cannot rest on their laurels and function in the world believing they can earn a living working in the same industry all of their lives.

My father kept me and my siblings as far away from the family business (a unionized business) as possible. He wanted his children to have better opportunities and he recognized the family business was in a long steady decline.

The simple fact is the economy needs a huge influx of cash very soon. This news item points out private companies are hoarding almost $2 trillion from the economy. The US Government cannot continue to print money to keep things just barely moving along. If we do that inflation will certainly bring us down. Germany seems to do pretty well with it's union dominated economy because half the directors of the company must be from the unions. Therefore no sneaky stuff goes on that union members are unaware of. This "German" approach to unions was used in the 1980's bankruptcy of Chrysler and Lee Iococa was able to get Chrysler back on it's feet back then. Shareholders seem to like stability and they would get stability if unions were on the board of directors. In Fact stockholders would have a whole new team to work with if unions were present on the board. Stockholders do have a gripe about paltry dividends. It seems that the senior officers get more money than stockholders. The US is now considered a good place to locate new industry because our wages have dropped to banana republic wages. You see it in the news all the time. Foreign investors think it wise to locate in the US, just in case America gets it act together. We still are the largest economy and do have a good workforce--only the disproportionate distribution of wealth seems to be holding the US back. Unions can help relieve that situation. Unions are about to come back --no matter what corporate leaders think.

All they are is big business that doesn't really care for the worker just the money they make out of them.

Been Union before paid dues and when my plant closed because of a union sqezzing the life out of the business we lost our jobs unions say oh well. I'll never be in the union again!

If the unions were so strong Ford ,Chrysler,and any of those other vehicle manufactures wouldn't have had to been bailed out by the goverment.

Hostess was mismangement and how many times did the unions go on strike when Hostess was in Business, Kansas is a right to work state, Hostess could have closed there doors at any time and just walked away.

I feel unions have ruined this country and hope they never get strong again.

That is why we have to pay 55,000 for a PU anymore that is made out of plastic and metal. What is considered a decent wage where you make an honest living. Unions is not the answer

The "Fool" in your name is right on target. Labor unions only do three things - their "extortion by threat of force" wages cause permanent unemployment equal to the amount they get paid above the market rate for labor, the price of their labor raises the price everybody else has to pay for their company's products, and the worst of all, their dues go to elect more Democrats. Good deal for them (the 11%), Bad deal for the rest of us (the 89%).

Retired union man. I exchanged my higher rate of pay as a contractor to accept the company's offer to go direct. The company is thriving albeit very anti-union. When their failed "outsourcing" came back to bite them in the butt and they had to buy out the vendor in South Carolina they told the people that if there was no union they would keep the place open. The people immediately voted the union out. The company promptly blackmailed the State to the tune of $750M of "improvements." Our feeling was that anyone stupid enough to vote their union out deserves what ever they get. Union workers built the strongest middle class the world has ever known. Greed has killed that middle class and the resultant lower class is cheering them on. Go figure.

In my opinion, unions helped to create the middle class and also helped to cause the demise of the middle class. When this country was first becoming industrailized, the scale was heavily tipped toward the company. Labor was an easily replacable resource due to the minimal skills that were required to perform the work in the early industrial economy. Over time the balance between labor and management changed and the unions became more powerful. Manufacturing was requiring a more skilled labor force and as the skill requirements increased the pool of labor to choose from decreased. The writer indicates that the 1950's was when union membership was at its highest and approval of unions was also at its highest. What the writer neglects to mention is that the US economy was the strongest in the world. World War II had decimated the European economy and the Japanese economy. The US economy was manufacturing for the world. There was no world wide competition for US manufactured products. With manufacturing being the dominate sector of the economy it makes sense that unions would be most prevelant in the 1950s. However, times change and it is my belief that the unions failed to change with the times. As the European and Japanese economies were rebuilt, they were rebuilt with the most efficient equipment available. With more efficient equipment these countries were able to produce goods for less cost than the US. Initially the US was able to keep its manufacturing edge due to better quality but over time even the quality edge began to narrow. Rather than recognize these changes, I think the unions became more concerned with protecting the benefits they had already obtained for its members and less concerned with the new world wide competion that was developing. As the world grew smaller the ability to manufacture goods in other countries became less expense, than in the US. It became cheaper to move manufacturing overseas. As US manufacturing was exported, the middle class jobs that were supported were lost also. This is something that has taken years to play out. It did not occur over the last four years. Comparing the 1950s economy and its job skill requirements to todays more idea-based economy and job skill requirements is unreasonable. Also, talking about the amount of money on the corporate balance sheets shows a lack of understanding of the impact of taxes on the economy. Over 50% of those dollars are overseas and could not be spent in the US without a significant decrease in the amount availble to actually spend because of the taxes which the corporations would have to pay on those dollars. Unionization, in my opinion, would not solve the income disparity facing our country. Better education, more emphasis on an energy policy in this country and a revision of the tax code would have more impact on the issue of income inequality than supporting the development of unionized employment. Thanks for this opportunity to weigh in.

There are a lot of things wrong with this article. Conservatives and Liberals can debate this back and forth ad nauseam, but I'd like to take a look at your math concerning incomes for the 1% vs. everyone else.

Top 1%:

Before the recession (starting point): 100%

During the recession: 63.7%

After: 83.7% of starting income

Everyone else:

Before the recession: 100%

During the recession: 88.4%

After the recession: 88.7% of starting income

So those figures don't really help your point at all. If anything it actually shows the opposite of what you are trying to say.

If you go down 50%, you need a 100% return to get back to even. <-(Important point for investors to understand).

In the olden days the threat of unions was enough to prompt non union employers to pay decent wages. But then union pay scales started getting too high, and union jobs started disappearing. Of course modern technology and low wages in Japan played a role also.

I don't like unions, but I also don't like CEO's making 500 times more money than their average employee.

I don't think raising the minimum wage is a solution, because when inflation kicks in to compensate for the higher prices some companies will need to charge, the cost of goods goes up for every one.

For now on my proxy statement, I always vote against executive compensation packages, and hope some of the money will end up with the lower paid employees, or at least the share holders.

Most people forget that America is a Union. It is stated in the first sentence of the Constitution. "We the people of the United States, in order to form a more perfect Union...." Unions and countries are not bad intrinsically but they do need good people as members/leaders to go in the right direction. Even Reagan agreed and said, "Our Founding Fathers well understood that concentrated power is the enemy of Liberty and the rights of man." Don't be blind. Allowing corporations to subordinate the Country the Union will undoubtedly lead to distribution of wealth toward the top. Wealth at the top will stagnant the economy. Wealth needs to be widely distributed, as again Reagan said, ... the American experiment in individual liberty, free enterprise, and republican self-government could succeed only if wealth is widely distributed as possible." Government by the people is the largest government possible. The Trade Unions are the balance of power and wealth between the Union and the corporation. We need to be good people to have a good country.

Parker Hannifin in New Haven,Indiana is moving to Mexico.The sad part of this story is only the non union factories that they own are going to Mexico. I got friends who work there and are pissed that unions held the company to labor contracts and are keeping the union shops in the US.

Another statistic that media outlets brought up, but companies in fast food and retail have been paying minimum wage for ever, even thought the cost of living has gone up massive. Gas prices shot up causing food to skyrocket and the government hardly ever increases minimum wage to offset inflation. Pay for food,auto insurance, and gas and your homeless after them expenses, and these industries need to start covering wage increases that reflect inflation or else poverty will continue to increase.

I'm not saying pro union or anti union, but i can see where stuff is screwy and say our GOV should do better at regulating wages and inflation to reduce the need for public assistance

The author seems to be in a delusional cloud. The reality of the 21st century world is your value is equal to your skill. The moats of the industrial age are gone. I live in Michigan. The Detroit Free Press did a great article right at the beginning of the financial meltdown. What they found is that the workers in the automobile industry generally encouraged their children to follow in their footsteps. The result was expected.

Germany came to the realization that if a worker does not have value, they cannot command a high wage. Thus there is a tremendous emphasis on education and training for even the vocational level. German workers in the advanced manufacturing industry bring value to the companies they work for.

There is fabulous vocational and technical training opportunities in the United States. However too many individuals choose to not push themselves be it vocational or academic. There will always be examples of exceptions where someone did everything right fate just was not for them. Working hard is not good enough. Working smart is what gets you ahead. Get a degree in the History of Art or expect to pound nails into 2x4's for 40 years, you will get the same results.

The author believes mandating 15 dollar minimum wages is going to fix the world. It will have the same impact as when the woolworkers of 18th century England successfully blocked the automation of wool textiles. People just started wearing cheap cotton. The price point for automating all of those mundane jobs will be exceeded and their will be no jobs.

Every industry that has been unionized, has suffered. Every state, locality and municipality that has been unionized, has suffered. Unionization is nothing but mob rule sanctioned by the politicians so that they can extract money from the producers.

How many of the union haters here actually worked for one. Everyone thinks they hate unions until they get a pink slip. Yes I do work in a union shop and yes I'm happy that I do. If I didn't I'd have no pension, be making at least $10 less an hour, and my job would probably have been outsourced this year since that seems to be the trend. Most employers are not as nice Costco, and with Obamacare coming employers are slashing benefits, hours, wages, and employees. Companies are hoarding cash and giving less and less to their employees. Don't knock unions until you actually work for one and see the difference for yourself. Yes wages need to be realistic but companies will always tell you their broke. The average CEO makes 500 times the average worker. There's a good chance your nonunion job will be outsourced because all of the nonunion jobs at the company I work for have been.

Is it merely coincidence that since unions have declined in the US so has our standard of living compared to other developed countries. We aren't No. 1 anymore. Record profits, lower standard of living, the new America.

Look back in time and you will see how much Unions protected everyones jobs. Steel workers union kept demanding and the factories moved to China. The television , computer , cell phone companies moved. G E moved the majority of it's manufacturing to China. The auto industry is laying off and closing plants even today. What is the union doing NOTHING. They are hurting for money to pay their top excutives.

People rmember if Mc Donalds pays 10 dollars an hour your 1 dollar menue becomes a 5 dollar menue so you gain $1.75 to pay $4.00 for the same meal. show me your gain. $12.50 minimum wage at Walmart would raise the average cost of items $2.00 to $6.00 depending on the product.

How many of you people can afford to buy a new car today and in the future they would even be higher. Nissan is already building cars in India for $4,000 dollars and better millage then American cars. They went back to old school no computer system. any one who is machanicly inclined could work on their own car. INTERESTING

What the anti union posters fail to realize is we do not pay any less for the products we are currently purchasing. The difference is now it is profit gained for cheap labor. Price an appliance today and see what savings you are getting for the cheap labor. Prices have continued to climb and the quality and life span of the appliance has decreased. Price an automobile and you will find the same thing. Quality has become JOB NONE. Most vehicles are made south of the border and you will be hard pressed to locate a vehicle actually built in the U.S. You can check this by asking the dealer to see the place of manufacture that is listed on every vehicle you wish to purchase. Almost all are either built somewhere else or just assembled here. So to claim that outsourcing jobs has been beneficial to the consumer is just wrong. The price has still climbed and quality and lifespan has decreased so where are the savings? If you don't mind the profit being made by the people selling us this junk at our expense I guess all is well.

"One of the biggest benefits of union membership is that union members make higher wages than non-union workers for comparable work. More money earned means more cash to spend -- a real advantage in an economy that is 70% consumer-driven."

However, the author ignores the fact that increasing the wages of the employees will result in an increase in the costs of goods and services rendered. This will be passed onto the rest of the consumer base in the form of higher prices. Typically, this results in a reduction in consumer demand for this product.

This happened in the American auto industry when the costs for domestically produced automobiles went up to the point that imported Japanese cars were more competitive, even with the added import tarriffs on those cars.

Unions serve a purpose when they protect the employees from abusive practices and hazardous conditions, but when they demand wages that are not commensurate with the skill set of the employee and the value added by the job performed, then all they serve to do is increase the cost of living for the consumer.

When I got my first part time job as a teenager I was forced to join a union. I was making minimum wage at the time but still had to pay union dues. My manager wanted to reward me with good shifts because I was motivated and worked hard. But he could not because the hangers on who did not work could use the union rules to bump my shifts. There are a lot of hard workers in unions. I would not say smart workers as most seemed to be content with their place in life. But that is okay if that is your value choice. But the union also protected people who were crummy workers and that really turned me off.

The fundamental problem with unions is that they do not take ownership of their problem. Don't like what you get paid or how much the C-suite makes? Quit yer bitchin' and start your own company! How come the unions didn't buy out GM & Chrysler? Then they could pay their employees whatever they want to and the leaders could prove their selflessness and manage multi-billion dollar corporations at 10x the lowest wage employee. PROVE UNION COMPANIES ARE BETTER!! Oh wait, they would have to satisfy their shareholders... and compete in a global economy. The previous posts are arguing symptoms, not solving root problems.

Great article! I think the issue is balance. Now would probably be a good time for unions because income inequality is the main problem holding the greater US economy back (of course there are others). In the 60s, the pendulum was probably too far in their favor. It's disappointing many commenters (for and against) seem to think there is only one one answer to this question and it's always right.

Wow! Got to be the most lame article I've ever read on this website. Surely the articles posted on this site are vetted by someone with a brain??? Jump start the economy with Uniions? Yes and you can jump start your car with a concrete block. Has she checked out the state of Michigan lately? Checked on the airlines lately. Where is the economy booming in the U.S.? Where are all the jobs coming from? Answer: any place that's not run by the unions and choked by government and burdened with taxes!

Income inequality, and "inequality" in general, has been around since the dawn of the human race.

It is ignorant to think we can live in a world without "inequality."

The income inequality we experience today is the smallest it has been in the history of the world. I for one would rather be poor today, than poor 100, 200, 500 years ago. The answer is, poor today is rich relative to the living conditions and quality of life seen in the past.

You can't rid the world or any nation of income inequality. It will ebb and flow, but it will always exist, by and large.

Do what you have to do to be a responsible individual. Anytime you hear someone say "share the wealth", they just don't get real life.